MARSEILLE, France â€” French Muslims celebrated Thursday when work began to build the countryâ€™s biggest mosque in the southern port city of Marseille, a potent symbol of Islamâ€™s place in modern France.

Moves by President Nicolas Sarkozyâ€™s government to ban the full-face veil have raised tensions between Franceâ€™s political class and its five million strong Islamic minority, with many Muslims feeling stigmatized.

But Muslim and government leaders alike hope that work on the Grande Mosque will serve to bind the city together and serve as a community anchor.

Marseille is Franceâ€™s second city and home to 250,000 Muslims, many of whom are currently obliged to perform their rites in makeshift prayer houses in basements, rented rooms and dingy garages to worship.

With a minaret soaring 25 meters (82 feet) high, the Grand Mosque will hold up to 7,000 people in its prayer room and the complex will also boast a Koranic school, library, restaurant and tea room when it opens in 2012.

Muslims in Marseille have long campaigned for a mega-mosque as a prominent gathering place that would bring Islam out of the basements and allow it to thrive under the Mediterranean sun.

The turning point came in 2001 when Mayor Jean-Claude Gaudin, a member of Sarkozyâ€™s right-wing party, threw his weight behind the project, overriding objections from the far-right.

Like Sarkozy, Gaudin sees the new mosque as a way to help French Muslims integrate into the mainstream and foster a form of moderate, modern Islam that shuns symbols of exclusion like the full-face burqa and niqab veils.

â€œThe construction of this Grand Mosque will serve as a showcase for Marseilleâ€™s Muslims to promote the true face of Islam, an enlightened Islam,â€ said Mohamed Moussaoui, president of the French Council of the Muslim faith.

After years of delays, the project still faces hurdles to raise the full 22 million euros (27 million dollars) needed to finance it.

Nourredine Cheikh, an Algerian-born businessman and president of the association leading the campaign for the mosque, said his group is hoping for big donations from north African countries, Saudi Arabia and Malaysia.

Among the dozen diplomats who attended the ceremony, Algerian Ambassador Missoum Sbih said Muslims in Marseille â€œcould not do without a dignified place of worshipâ€ in France, â€œEuropeâ€™s number one Muslim country.â€

Algeria will sit with other donor countries to work out financing, he said.

The grand mosque will be built in the Saint-Louis area of Marseille, an ethnically mixed neighbourhood that suffers high unemployment and poverty.

Home to Europeâ€™s biggest Muslim minority, France has for years been debating how far it is willing to go to accommodate the practice of Islam, now the countryâ€™s second religion, into every day secular life.

Soon after Switzerland voted to ban minaret construction last year, Sarkozy warned French Muslims to â€œavoid ostentationâ€ in the practice of their religion and he has declared the face-covering veil â€œnot welcomeâ€ in France.

With parliament now set to debate a bill that would bar women from wearing the full Islamic veil, Muslim leaders worry about a surge of Islamophobia.

Last month, gunmen sprayed bullets across the facade of the Arrahma mosque in Istres, a town a few dozen kilometres from Marseille, raising alarm among Muslims.

Nadia Houte, a 31-year-old teacher, said the mosque would bring Muslims together and promote a positive image of Islam.

â€œWe are Muslims, not fundamentalists,â€ she said. â€œThe burqa doesnâ€™t interest me. This has nothing to do with me.â€

There will be no blaring call to prayer from the Grand Mosqueâ€™s minaret to disturb non-Muslim neighbours, but simply a blue light that will flash five times a day to summon the Marseille faithful to prayer.